Progressive moves to uplift corona affected SMEs to provide raw material to big manufacturing in china

Progressive moves to uplift corona affected SMEs to provide raw material to big manufacturing in china

China and its leadership has continued to look forward at this century as superpower role through its  economic strength followed by  development of all sectors manufacturing innovative technological  expansion to be provided by well developed SMEs. 

China has expressed its strong commitment in the wake of corona virus spread and its control measures  for which it designed policies to combat the effects of corona virus on SMEs which being the major  source of rae material for its rapidly developing manufacturing industry poised to achieve the status of  superpower challenging the only superpower USA.                                      

Chinese government has affirmed to extend every as the big manufacturing units need raw material  as these have been badly affected by corona pandemic. possible support to SMEs. In pursuit of high innovative technological advancement to achieve greater world power role through  economic empowerment, such support to SME s has been committed by the government. 

According to  available data the contribution of SMEs stands at 60% of GDP and in respect of urban employment ,it  stands at 80%, which shows that it has significant sector and cannot be ignored if china wants to follow  the superpower role. 

The increased reliance of china on the development of small tech SMEs for future innovation is  understandable in view of greater pressure of regulator on big manufacturing units.

The government is aimed at devising program and policies for extended support to SMEs to  encourage scientific innovation in the country.

As the pandemic corona have badly affected the enterprises large and small equally the government has  drafted preferential policies to treat the small and medium enterprises to make a more favorable and  conducive business environment.

The applicability of these policies for implementation will cover all the SMEs including small,medium,  micro and foreign invested enterprises on the basis of employees, business income, total assets and  other indicators as the criteria for standard formulation of such policies.

These supporting policies are seen as very vital for overall growth of small,medium enterprises leading  to big manufacturing technological innovative units. The policies are summarized below:-

1.The social security application with heavy contributions affected the small medium enterprises specially under pandemic situation when growth production and marketing distribution was weakened.   It was therefore needed to reduce and exempt  this social security contributions for SMEs to give relief entering into force on Feb 20,2020 as per circular of the Ministry of Human Resources and Social Security, the Ministry of Finance and the State  Taxation Administration.

2.Another relief was the exemption in rental payment or its deferment to ensure financial sustainability and empowerment of the affected SMEs sector owing to Corona Virus pandemic.

Those SMEs engaged in production and housed in state owned leased properties continue to follow government rules and regulations without laying off or  fewer layoff staff even if they were closed ,the rent was exempted, for office buildings up to 50% reduction

3. Provision of subsidy  up to RMB 200,000 for R& D to facilitate the operation of SMEs engaged in science and innovation technology depending upon actual situation and investment.

4.The SMEs affected by corona causing temporary closure in their operations,staff layoff,low productivity, marginalized profit or financial insustainability have been given provision of refund of unemployment insurance premium refund if the SME is expected to recover from this challenging economic conditions.

5.In other provinces,financing guarantee to help enterprises  with the case flow, reducing the prices for natural gas and water for industrial use, etc. 

6.Waiving administrative fees for SMEs. The Beijing government will suspend the collection of some  administrative fees from SMEs, including special equipment inspection fee, sewage treatment fee, and  road occupation 

Providing SMEs other subsidies for employee training and purchasing teleworking service production

China will, in particular, boost the development of innovative sci-tech SMEs featuring key technologies,  research personnel, high-value intellectual property rights and high research input, according to the  notice.

More efforts will be made to support high-tech SMEs to generate innovation as well as introduce  domestic and global talents by optimizing related policies and injecting diverse resources, the notice  added 

 

In the china economic statistics we find that private sector like SMEs contribute quite heavily in the annual progress.The central bank in line with governments initiatives will also increase lending to SMEs raising it from its present level of 52%. with this increase ,the size of loan  may exceed 5 trillion yuan.

The efforts are being made in consideration of limited capital base and higher risk potential owing to pandemic followed by financial crisis which china has largely overcome.coupled with this a large scale migrant workers around 20 million who lost their jobs in SMEs.

This is itself a grave challenge to accommodate in public and private sector SMEs through provision of effective and strong governmental support..

The need is to provide bank loans to this sector robustly but may fall as lending to big will also increase. The workers will be seeking higher wages due to inflation and less purchasing power.So the pressure and challenges will be big for reformation of SMEs raw material manufacturing for ensuring uninterrupted supply to its big manufacturing